Chat with us, powered by LiveChat


Can I qualify for business debt relief if I still have some cash flow?

This is a great question that a lot of small business owners are asking these days. Times are tough, and even if your business hasn’t completely dried up, you may still be struggling under a mountain of debt. The good news is that there are options out there to help relieve some of that debt burden, even if you still have some cash coming in.

The most common form of business debt relief is filing for bankruptcy. There are a few different types of bankruptcy filings, but the two most relevant for small businesses are Chapter 7 and Chapter 11. Chapter 7 is what’s known as a “liquidation” bankruptcy – essentially you’re wiping the slate clean, closing up shop and selling off assets to pay creditors. This is a last resort when the business is truly no longer viable.

- -

Chapter 11 on the other hand is a “reorganization” bankruptcy. The business stays open while working out plans to restructure debts and payments. This involves negotiating with creditors to reduce debt amounts or change payment terms. The goal is to create a more manageable situation that lets the business get back on its feet.

So if you still have some cash flow coming in but are drowning in too much debt, Chapter 11 could be a good option. The court essentially hits pause on collections and lawsuits while you work out the details of reorganization. This stops the bleeding and gives you breathing room to reshape the fundamentals of the business.

There are definitely strict qualifications and hoops to jump through, however. You’ll need to put together detailed financial records and projections, and prove to the court that the business is still fundamentally viable. It’s complex and you’ll absolutely need an experienced bankruptcy attorney to guide you through the process.

The Small Business Reorganization Act of 2019 also created a streamlined version of Chapter 11 specifically designed for small businesses. This “Subchapter V” bankruptcy has fewer bureaucratic hurdles and reporting requirements. It was created to make the process more accessible and affordable for true small businesses. So that’s something to explore with your attorney.

Outside of bankruptcy, there are some other potential options for debt relief like debt consolidation or settlement. This is where you work directly with creditors to combine multiple debts into one overall payment, or negotiate reduced lump sum settlements on what you owe. If you can scrape together enough savings to offer meaningful lump sums, creditors may be willing to settle for less than 100% of what you owe in order to get something versus risking bankruptcy where they may get nothing.

Nonprofit credit counseling agencies like the National Foundation for Credit Counseling may also be able to help negotiate with creditors on your behalf. They have experience creating debt management plans. Just beware of scammers claiming to be credit counselors as well.

The bottom line is don’t wait until it’s too late. If your business is facing unsustainable debt, start exploring relief options right away before it’s a crisis situation. Know the qualifications and talk to both a bankruptcy attorney and a small business financial advisor to understand all your options. With the right plan, you may be able to qualify for debt relief even with some cash flow remaining. Don’t lose hope – you can get your business back on track!

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

"Super fast, and super courteous, Delancey Street is amazing"
$500,000 MCA Restructured Over 3 Years
"Thanks for helping me in literally 24 hours"
$250,000 SBA Loan Offer in Compromise
"Great choice for business owners who need a trustworthy partner"
$350,000 MCA Restructured Over 2 Years

In The Media

Delancey Street CEO discusses ways to reward employees
Delancey Street CEO discusses the benefits of franchising on Forbes.
Delancey Street CEO discusses management on AMEX.
How to Lower Your Monthly Auto Loan Payment

How to Lower Your Monthly Auto Loan Payment A high…

Boston Merchant Cash Advance Attorney

Boston Merchant Cash Advance Attorney Getting a merchant cash advance…

How To Get Out Of A Merchant Cash Advance – MCA Debt Relief

How to Get Out of a Merchant Cash Advance So…

Getting Free Help with Your Student Loans is Incredibly Easy

Getting Free Help with Your Student Loans is Incredibly Easy…

6 Signs Your Future Spouse Is Bad With Money

  6 Signs Your Future Spouse Is Bad With Money…

Delancey Street simply gets it. You're talking to experts.
Steven Norris
Get Help Today

Ready To Get Started?

If you have questions, feel free to shoot us an email, or fill out our live chat.

Schedule Consultation